This AZ-900 practice question tests your understanding of describe cloud concepts. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A company is moving its on-premises data center to the cloud. Previously, they purchased servers and paid for maintenance. Now they pay a monthly subscription for compute and storage based on actual usage. This is an example of shifting from capital expenditure (CapEx) to which type of expenditure?
Operating expenditure (OpEx)
OpEx is the ongoing cost for services, aligned with pay-as-you-go cloud billing.
Variable expenditure
Why wrong: Variable expenditure is a feature of OpEx, not the overall category.
Direct expenditure
Why wrong: Direct expenditure is not a standard cloud financial term.
Indirect expenditure
Why wrong: Indirect expenditure refers to overhead costs, not directly related to cloud billing.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Operating expenditure (OpEx)
This scenario describes a shift from upfront capital investment in physical servers and maintenance (CapEx) to a pay-as-you-go model where costs are incurred based on actual usage. In cloud computing, this is the definition of operating expenditure (OpEx), as the company pays a recurring monthly subscription for compute and storage resources rather than making a large initial purchase.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Operating expenditure (OpEx)
Why this is correct
OpEx is the ongoing cost for services, aligned with pay-as-you-go cloud billing.
Related concept
Read the scenario before looking for a memorised answer.
Variable expenditure
Why it's wrong here
Variable expenditure is a feature of OpEx, not the overall category.
Direct expenditure
Why it's wrong here
Direct expenditure is not a standard cloud financial term.
Indirect expenditure
Why it's wrong here
Indirect expenditure refers to overhead costs, not directly related to cloud billing.
Common exam traps
The trap here is that candidates may confuse 'variable expenditure' with OpEx because cloud costs can fluctuate, but the exam specifically tests the accounting distinction between CapEx (upfront capital) and OpEx (ongoing operational costs) as defined in Microsoft's cloud economics model.
Detailed technical explanation
Under the hood, cloud providers like Azure use a consumption-based billing model where resources such as virtual machines (VMs) and storage accounts are metered per second or per hour, and invoices reflect actual usage. This contrasts with CapEx, where a company would depreciate a physical server over 3–5 years. In a real-world scenario, a company migrating from on-premises to Azure might eliminate datacenter cooling and hardware maintenance costs, converting them to predictable monthly OpEx for compute and storage.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
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FAQ
Describe cloud concepts — This question tests Describe cloud concepts — Read the scenario before looking for a memorised answer..
The correct answer is: Operating expenditure (OpEx) — This scenario describes a shift from upfront capital investment in physical servers and maintenance (CapEx) to a pay-as-you-go model where costs are incurred based on actual usage. In cloud computing, this is the definition of operating expenditure (OpEx), as the company pays a recurring monthly subscription for compute and storage resources rather than making a large initial purchase.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 11, 2026
This AZ-900 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the AZ-900 exam.
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